money supply, banking & financial institutions section 2 MCQ Questions & Answers Detailed Explanation

Question : 1

The sum of which of the following constitutes Broad Money in India?

1. Currency with public
2. Demand deposits with banks
3. Time deposits with banks
4. Other deposits with RBI

a) 1, 2 and 3

b) 1, 2 and 4

c) 1, 2, 3 and 4

d) 1 and 2

Question : 2

Why is the offering of ‘teaser loans’ by commercial banks is a cause of economic concern?

1. The ‘teaser loans’ are considered to be an aspect of sub-prime lending and banks may be exposed to the risk of defaulters in future.
2. In India, the ‘teaser loans’ are mostly given to entrepreneurs to set-up manufacturing or export units.

a) Only 2

b) Neither 1 nor 2

c) Both 1 and 2

d) Only 1

Question : 3

A currency whose exchange rate is influenced by the government is a/an

a) Scarce Currency

b) Surplus Currency

c) Unmanaged Currency

d) Managed Currency

Question : 4

The decimal system was made applicable to Indian currency system in which year?

a) 1957

b) 1949

c) 1935

d) 1947

Question : 5

If new currency is being issued, then who has the authority to decide its "Denomination":

a) RBI Central Board of Directors

b) Central Government

c) RBI Governor

d) Monetary Policy Committee

Question : 6

Inflation, in theory, occurs:

a) when the price of essential commodities outstrips income

b) when the exchange rate of a currency falls

c) when money supply grows at a higher rate than GDP in real terms

d) when fiscal deficit exceeds balance of payment deficit